February, 2010
FTfmonAV
Some highlights from this week’s FT fund management,
Asset managers boost their reserves
The financial health of asset managers is increasingly being scrutinised by regulators and by institutional investors
European recovery continues in Q4
European fund industry chalks up a third straight quarter of gains,
The oligarch list
From Finans magazine, a list of rich Russians. Commentary (in Russian) here and an unsatisfactory Google translation is available here.
Note the toppling of Roman Abramovich, replaced by Vladimir Lisin,
CDS report: The discount rate adjustment is a technical move, not a policy shift
Otis Casey of Markit wrote this CDS report
Equity markets started a bit lower today and the US Dollar strengthened based on the Fed’s surprise move to raise the discount rate by a quarter of a percentage point to 0.75%.
For Greece, another insult
From S&P:
Brevan Howard is not an evil anti-Spanish speculator, ok?
From the horse’s mouth on Friday (via Reuters):
RTRS – HEDGE FUND FIRM BREVAN HOWARD SAYS HAS NO EXPOSURE TO GREEK DEBT OR CDS – INVESTOR LETTER EXTRACT
RTRS – BREVAN HOWARD SAYS HAS NO EXPOSURE TO PORTUGUESE,
J-com, fat fingers and a case of mistaken identity
Oh dear… it’s not quite a “fat-finger” case this time but rather, what you could call a “thick” moment for a hapless trader.
J-Com, the Japanese recruitment company at the centre of a “fat finger”
Riding on a sovereign guarantee in Spain
As FT Alphaville has pointed out, some strange distortions are emerging in the trading of Spanish Instituto Credito Oficiale (ICO) debt.
On Friday, for example, ICO paper — which carries the full and explicit guarantee of the Kingdom of Spain — was trading at the same rate as comparable Santander-issued covered bonds (+73 bps over the mid-swap,
‘There is literally no-one who has completely covered themselves in glory throughout the crisis’
Timothy Ash, head of emerging markets research at RBS, issued both a mea culpa and a call to arms in a note on Friday.
First, the mea culpa:
The global credit crunch has been a learning experience
Moving down the corridor…
We won’t pretend to understand all of this 2008 Federal Reserve paper.
The basic premise seems to be that central banks can separate monetary policy from actual money. They can do this by using a “floor system”
Asian electronic trading: you ain’t seen nothing yet
It has really only been a matter of weeks since the Tokyo Stock Exchange – Asia’s biggest bourse – gained Arrowhead, or what you could call a 21st-century trading platform.
Already, however, traders have shaken off their usual jaded and cynical view of the comparitively arcane world of Japan-based stock trading.
Lunch Wrap
On FT Alphaville Friday morning,
- The (2001) illustrated sovereign swap.
- An ICO distortion in Spain.
- So much for discount rate stigma?
- Moody’s does δομημένη χρηματοδότηση.
Meet Petros Christodoulou
He’s the new head of Greece’s debt management agency. From Forbes:
It’s an interesting biography, to say the least, given current controversy over a Goldman Sachs-completed Greek derivatives deal.
Markets Live transcript 19 Feb 2010
Markets Live chat transcript for the chat ending at 12:15 on 19 Feb 2010. Participants in this chat were: Bryce Elder Tony Tassell
BEGood morning
BEAnd welcome to Markets Live
Moody’s does δομημένη χρηματοδότηση
Bad news for Greece.
Moody’s, the only rating agency that still has Greece at the A level, has just placed almost every single triple-A rated Greek structured finance and covered bond deal on review for a downgrade.
Spain’s ICO distortion
FT Alphaville was recently alerted to a strange disparity between Spanish government bonds and those issued by a key Spanish SSA issuer Instituto Credito Oficial, which is a general provider of credit support to small and medium-sized businesses in Spain.
The (2001) illustrated sovereign currency swap
Ta-dah — a theoretical sovereign currency swap purportedly presented to European officials in the early years of the new millennium. The diagram was drawn up in 2001 by Gustavo Piga, an Italian academic specialising in public debt and monetary policy issues.
Discount rate stigma
Is it a coincidence that around the same time the Federal Reserve announced it was raising the discount rate, board member Elizabeth A. Duke was speaking about the exact same thing?
In a speech at the Economics Club of Hampton Roads,
Further reading
Elsewhere on Friday,
- Save Lucas van Praag!
- Assessing the stimulus, one year in.
- Back and forth on British austerity.
- RBS will not be made to feel guilty about its shiny new building.
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Gillian Tett: The US battle to pull the props
Could the Obama administration’s plans to curb “proprietary trading” produce a nasty jolt for the US Treasuries market? If Bob Diamond,
Snap news
Breaking pre-market news on Friday,
- Anglo American reports 2009 operating profit of $5.0bn – statement.
- Carrefour full-year net income from continuing operations falls 69.6 per cent to €385m – statement.
Did the discount rate hike leak?
Sure, the Federal Reserve made it very clear on Wednesday that while it would soon be raising its discount rate, this should NOT be taken as an indication that policy was being tightened.
But we’re pretty sure that’s exactly how it will be taken, what with markets being markets…
CDS report: Steels lead
Markit’s Otis Casey wrote this CDS report
Market reaction was fairly benign today considering that US economic news was mostly negative. US jobless claims and wholesale prices were higher than economists
Taibbi attack
Eddy Elfenbein at Crossing Wall Street really doesn’t like the guy who gave us the Vampire Squid:
Lots of people love Matt Taibbi’s reporting. I find him entertaining, but not very worthwhile. I don’t see him as a journalist but as a courtier to the hip class.
In CDOs we TruPS
Your daily dose of structured finance acronymic hindsight available right here, in a TruPS CDO edition.
From Fitch Ratings on February 12:
Fitch Ratings has placed 179 notes from 72 bank trust preferred (TruPS) collateralized debt obligations (CDOs) on Rating Watch Negative to reflect the increased default and deferral activity in bank TruPS assets.
Should European banking bosses keep their mouths shut?
PR firm Hill & Knowlton has begun to dabble in an arena usually reserved for its banking clients: modelling.
As the Gorkana PR service reported on Thursday:
Hill & Knowlton in conjunction with Commetric have developed a model,
So will we ever get off QE?
Just a quick thought.
Wednesday’s Federal Open Market Committee minutes showed US central bankers pondering an exit strategy from their extraordinary liquidity operations. But they also pretty much left the door open to continue their quantitative easing programme if the economy needs it.
Lunch Wrap
On FT Alphaville Thursday morning,
- Spreading in the UK…
- ‘We believe the market might be underestimating the risks the [Spanish] financial system faces.’
- How a weak euro could rescue Europe.
Spreading in the UK…
The yield on Britain’s 10-year gilt just shot up to about 4.2 per cent, according to Reuters data.
Unfortunately you can’t see it in the below Bloomberg charts, since the data service appears to still be using a March 2019 benchmark (Reuters is using a 2020 one),
BNP Paribas says a weak euro could rescue Europe
When FT Alphaville met with BNP Paribas’ head of currencies Hans Redeker in an informal meeting a couple weeks back, one of the subjects discussed was the need for a weaker euro to stimulate German exports beyond the Eurozone to offset falling demand from within Europe.